Neither borrowers nor lenders can predict the actions of government people and cronies. But with every action on fixed-rate mortgages, elites gain and borrowers lose.
February 19, 2026
Fixed-rate mortgages sound simple. But they help government people and cronies unduly deprive persons of property.
Government people, crony bankers, money-users, and borrowers
Government people spend more by borrowing and by forcing people to pay this debt. They inflate away part of its value, and with it, the value of all government money. That forces all money-users to pay part of this debt.
Crony bankers benefit from an unconstitutional privilege to create money and receive interest. Whether their returns are large or small, they still benefit.
Money-users don't consent to government money inflation but get forced to suffer its harms. Since 1913, consumer‑price inflation has averaged 3.16% to 5.01% per year. In the past, when money could be redeemed in gold or silver sooner or later, productivity gains produced consumer‑price deflation which amounted to inflation that averaged ‑2.4% to ‑2.1% per year.
Borrowers are lowest on the totem pole. Some find borrowing addictive. Most support lower interest rates, unaware that lower rates produce inflation and recessions they hate.
Inflation, which government people cause, makes borrowers' nominal debts have less real value, but borrowers scarcely notice this. Borrowers definitely notice that their money has less real value for other purchases. They gain less on their debts than they lose on their other purchases.
Inflation also incentivizes borrowers, like all people, to save less. Also, at times government people push interest rates higher. Many borrowers end up with low savings and low-interest-rate mortgages, and become unwilling or unable to move and pay more. They stay in housing they don't want any more. Other people who want this housing can't buy it.
Recessions are part of government-money-error (GME, pronounced "gimme") cycles. These are caused by government people's spending, but the resulting pain falls heavily on borrowers. Some lose jobs. And with business down everywhere for a long time, some lose homes.
Crisis deflations instead harmed borrowers for many years, up through the Great Depression. Government people caused these too, by allowing crony bankers to hold only fractional reserves and use these reserves as the basis for creating and lending money. This brought bank runs, bringing bank panics, freezing up depositors' money that banks hadn't held in reserve. Customers had much less money. Producers had to slash prices.
Crisis deflations made borrowers' nominal debts have much-higher real value. Crisis deflations also made borrowers unable to earn at the same nominal rates as when they had borrowed. Many borrowers were self-reliant farmers who bought few other products, so they benefited little from the crisis-deflated prices for other products. Crisis deflations made them much-more indebted and at the same time much-less profitable.
Borrowers were treated as liable for the nominal principal and interest of their debts; government people and crony bankers caused the crisis deflations, then didn't restore the debts' initial real terms. Government people let crony bankers take borrowers to the cleaners.
Pervasive infancy
Government people can't reliably estimate how much they will borrow across the next year. Crony bankers can't reliably estimate what interest rates they will target the next month. If these best-informed actors can't predict their own actions from one period to the next across the extended course of a mortgage, borrowers far removed from those people's actions can't predict those actions either.
Michael S. Lewis explained how nowadays, final customers' capacities to contract for purchases are fraught with "shifting environmental constraints and pressures upon which our capacities are contingent... which take the form of complex, unreadable, unread, and sometimes hidden contract terms that no consumer has the power to negotiate, regardless of their intelligence, foresight, wisdom, or other internal capabilities." Lewis called this "pervasive infancy." He suggested that we "place the risk of breach with the competent party who may more efficiently protect the interests of an incompetent party."
Fixed-rate mortgages are purchases of the use of money. Borrowers have no power to negotiate how the resulting obligations will be affected by government people or cronies. Lenders have no such power either. Fixed-rate mortgages lock these borrowers and lenders both into states of pervasive infancy.
Fixed-rate mortgages increase uncertainty. Banks price higher-uncertainty mortgages' interest rates higher. Since these interest rates are higher, lenders, borrowers, developers, and suppliers all lobby for government people to push interest rates lower.
Pushing rates lower by increasing the quantity of money increases consumer-price inflation. This lets government people inflate away a larger portion of the real value of their borrowing, so government people then spend more. Pushing rates lower also increases malinvestment booms followed by busts, causing job losses and bankruptcies. This lets government people exploit busts to spend even more. In all, government people forcibly take more and more from future taxpayers and future money-users.
Full-reserve moneys, or at least variable-rate mortgages
People need shelter. Mortgages offer ownership. But mortgages with fixed interest rates leave borrowers worse off in every case-when government people inflate the quantity of money, causing consumer-price inflation and malinvestment booms and busts, but also even if government people keep the quantity of money constant, allowing healthy deflation.
Fixed-rate mortgages infantilize borrowers, lenders, crony bankers, and government people. Further enabled by these seemingly simple instruments, governments only grow in power and control.
There are two ways out. One way is to change the environment external to borrowers and lenders by taking away government people's and cronies' control of interest rates, by enforcing the constitutional requirement of full reserves for all moneys. The other way is to eliminate fixed-rate mortgages and only allow variable-rate mortgages.
When government people let bankers lend by holding only fractional reserves, they create inflation and crises. When government people also let bankers produce fixed-rate mortgages, the combination is infantilizing, which makes it toxic. We must make government people make bankers hold full reserves, or at least only produce variable-rate mortgages.